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Ducking Recession

Updated May 13, 2008 1:27 p.m. ET

It may look and feel like the economy is in a recession, but the latest reading on retail sales wasn't exactly quacking like one.

The Commerce Department reported that U.S. retail sales fell 0.2% during April. But the narrow decline was due to a plunge in the automobile industry and demand climbed in many sectors, a sign the economy might not be as weak as feared. U.S. sales of automobiles and parts fell by 2.8% in April, as high gasoline prices and economic uncertainty damped demand. However, sales by other retailers increased 0.5%; economists were expecting a 0.3% increase. "The consumer has not given up the ghost and continues to spend, despite the pressures on their budgets," wrote Joel Naroff, president of Naroff Economic Advisors. The retail sales report is a key indicator of U.S. consumer spending, which makes up about 70% of gross domestic product, the broad measure of economic activity in the U.S. GDP grew a mere 0.6% in the first three months of 2008, and there is fear the economy might have gone into recession, defined as two straight quarters of economic decline. Meanwhile, Wal-Mart Stores reported that lean inventories and strong international sales drove a 6.9% rise in its first-quarter profit despite the U.S. economic slowdown. Wal-Mart Chief Executive H. Lee Scott Jr. said he was "very pleased'' with the company's solid start to the year. Discounters like Wal-Mart are thought to be benefiting from consumers' trading down when meeting their basic shopping needs. But pointing to higher fuel and utility costs that are pressuring customers and small business, Mr. Scott cautioned about "headwinds'' the company and its customers face.

H-P Announces EDS Deal Hewlett-Packard unveiled an agreement to acquire Electronic Data Systems for $13.25 billion in cash and stock. The deal, which The Wall Street Journal reported Monday, would make H-P the world's second-largest provider of technology services after IBM.

Lawmakers Want Oil Purchases to Stop The Senate, in a 97-1 vote, directed President Bush to temporarily halt the shipment of thousands of barrels of oil a day to the government's emergency reserve. Both Democrats and Republicans said such shipments make no sense when oil is costing more than $120 a barrel.

Recovery Efforts Continue in China, Myanmar Rescuers dug through buildings turned into rubble by China's worst earthquake in three decades to reach trapped victims, as the death toll from the disaster rose to nearly 12,000. In Myanmar, another U.S. aid flight landed, while at the Thai border, efforts were being made to open a land route for deliveries. Myanmar's government estimates that 62,000 people are dead or missing.

On the Campaign Trail Sen. Hillary Clinton is heavily favored to win the West Virginia Democratic primary Tuesday as her campaign tries to use the contest to raise doubts about front-runner Sen. Barack Obama's electability in the fall. Polls close at 7:30 p.m. EDT.

Fed Chief Sees Improvement Ben Bernanke said the Federal Reserve's recent liquidity measures have led to improved market conditions, including a narrowing of credit spreads. But the Fed chief warned that market conditions "are still far from normal" and pledged to increase the size of the Fed's term auction facility.

Colombia Ships Out Warlords Fourteen paramilitary warlords from Colombia were extradited to the U.S. for failing to comply with a 2003 demobilization pact. Many were wanted on drug-trafficking charges.

Reassuring Data on Abbott Stent Abbott Laboratories' drug-coated stent Xience is as safe as, and potentially more effective than, Boston Scientific's market-leading heart devices, according to findings presented at a conference in Spain. Earlier data had given less-stellar marks to the stent, which is awaiting U.S. approval.

ABC Shows Strike Effects ABC will introduce only two new series in the fall, in a schedule the Walt Disney-owned TV network admits was severely affected by the 100-day TV writers strike.

French Bank to Tap Market Credit Agricole became the latest bank to line up for fresh funds, saying it is considering a roughly $9 billion capital increase to plug mounting subprime losses at its Calyon investment bank. It said write-downs pushed first-quarter profit down 24% from a year earlier.

Rauschenberg Dead at 82 Artist Robert Rauschenberg, whose use of odd and everyday articles earned him regard as a pioneer in pop art but whose talents spanned the worlds of painting, sculpture and dance, died Monday at the age of 82. He had been splitting his time between New York and Captiva Island in Florida.

-- Compiled by Erwin Shrader from reports by The Wall Street Journal and Associated Press; write to him at erwin.shrader@wsj.com